What's in Store for Meta Platforms ETFs in Q4 Earnings?
Social media giant Meta Platforms META is set to release fourth-quarter fiscal 2022 results on Feb 1 after market close. The stock has jumped 62.9% over the past three months and has underperformed the industry’s average of 12.2%. The outperformance might continue as Meta Platforms has a reasonable chance of beating on earnings.
This has put focus on ETFs — Communication Services Select Sector SPDR Fund XLC, Fidelity MSCI Communication Services Index ETF FCOM, Vanguard Communication Services ETF VOX, iShares Global Comm Services ETF (IXP) and MicroSectors FANG+ ETN FNGS — with a substantial allocation to this social media giant.
Earnings Whispers
Meta Platforms has a Zacks Rank #3 (Hold) and an Earnings ESP of +13.39%. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Meta Platforms saw a positive earnings estimate revision of 11 cents over the past 7 days for the soon-to-be-reported quarter. The Zacks Consensus Estimate for Q4 earnings indicates a decline of 39.2% from the year-ago reported figure. Revenues are expected to decrease 7% in the to-be-reported quarter. Meta Platforms delivered a negative earnings surprise of 2.55% in the past four quarters.
The stock belongs to a top-ranked Zacks Industry (top 24%) and has a VGM Score of A. The Zacks Consensus Estimate for the average target price is $170.14, with nearly 64% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings (read: 5 Tech ETFs Riding High on Sectors' Comeback to Start 2023).
What to Watch
In the last earnings conference call, the world’s largest social media platform expects to post another year-over-year revenue drop in the current quarter. It expects revenues in the range of $30-$32.5 billion for the fourth quarter given the broader fallout in digital advertisement.
ETFs to Watch
Communication Services Select Sector SPDR Fund (XLC)
Communication Services Select Sector SPDR Fund offers exposure to companies from telecommunication services, media, entertainment and interactive media & services, and has accumulated $9 billion in its asset base. It follows the Communication Services Select Sector Index and holds 25 stocks in its basket, with Meta Platforms occupying the top position at 16.6%. About 40.6% of the portfolio is allocated to interactive media & services, while entertainment and media round off the next two.
Communication Services Select Sector SPDR Fund charges 10 bps in annual fees and trades in an average daily volume of 6 million shares. It has a Zacks ETF Rank #3 (Hold).
Fidelity MSCI Communication Services Index ETF (FCOM)
Fidelity MSCI Communication Services Index ETF follows the MSCI USA IMI Communication Services 25/50 Index. It holds 113 stocks in its basket, with Meta Platforms occupying the second position at 10.7%.
Fidelity MSCI Communication Services Index ETF has amassed $509.5 million in its asset base and trades in an average daily volume of 128,000 shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook (see: all the Communication Services ETFs here).
Vanguard Communication Services ETF (VOX)
Vanguard Communication Services ETF also targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 113 stocks in its basket, Meta Platform takes the second spot with a 10.5% share. Interactive media & services is the top sector, accounting for 37% of the portfolio, while movies & entertainment, integrated telecommunication services, and cable & satellite round off the next three.
Vanguard Communication Services ETF has AUM of $2.6 billion and trades in a good volume of 305,000 shares a day, on average. It charges 10 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.
iShares Global Comm Services ETF (IXP)
iShares Global Comm Services ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 73 stocks in its basket, with Meta Platforms taking the third spot at 9.6% share. Interactive media & services dominates the fund’s return at 42.8%, followed by integrated telecommunication services (19.6%).
iShares Global Comm Services ETF has amassed $243.5 million in its asset base while trading at an average daily volume of 24,000 shares. The expense ratio comes in at 0.40%. IXP has a Zacks ETF Rank #3 with a Medium risk outlook.
MicroSectors FANG+ ETN (FNGS)
MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 equal-weighted stocks in its basket, with Meta Platform accounting for a 10% share (read: ETFs to Buy on Tesla's Record-Breaking Q4 Results).
MicroSectors FANG+ ETN has accumulated $53.3 million in its asset base and charges 58 bps in annual fees. It trades in an average daily volume of 27,000 shares and has a Zacks ETF Rank #3.
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Vanguard Communication Services ETF (VOX): ETF Research Reports
Fidelity MSCI Communication Services Index ETF (FCOM): ETF Research Reports
Communication Services Select Sector SPDR ETF (XLC): ETF Research Reports
MicroSectors FANG+ ETN (FNGS): ETF Research Reports
Meta Platforms, Inc. (META) : Free Stock Analysis Report
